Banco Bilbao Vizcaya Argentaria SA (ADR) (BBVA), Banco Santander (Brasil) SA(ADR) (BSBR): Buy Offshore Banks for Faster Growth and Bigger Gains

With a projected annualized increase in earnings of 22.7% per year for the next 5 years, Banco Santander (Brasil) SA(ADR) (NYSE:BSBR) is priced at a measly 9.41 times 2013 projected earnings and carries a price to book ratio of only 0.71. Rosy predictions are easy to make, but considering that this bank has grown its net income at an annual pace of 23.34% over the past five years, the forward projection would appear to be achievable.

The extremely generous dividend yield of 4.89% does require a troubling 95% payout ratio to support, but it’s probably sustainable, considering the exceptional earnings growth projections for the business. If the share price were to simply rise along with the earnings growth rate, investors would be rewarded with astounding capital gains from this investment. And if the stock were to simply rise to a price equal to the book value, a 40% gain would result.

Final thoughts and immediate actions

Banco Bilbao Vizcaya Argentaria SA (ADR) (NYSE:BBVA) operates in some truly attractive markets, but it’s also present in some that would appear to increase the risk exposure and limit potential overall growth.

Bancolombia S.A. (ADR)(NYSE:CIB) is doing business in a growth country that is experiencing improving economic and social stability with some very sustainable industries. This is a business that deserves very serious consideration as an opportunity to add some safe, international exposure to a well-balanced portfolio.

Banco Santander (Brasil) SA(ADR) (NYSE:BSBR) is quite simply one of the most compelling opportunities offered in the market today. Investors who fail to act now in taking a position in this stock may well regret that lack of action for many years to come.


Ken McGaha has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
Ken is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Buy Offshore Banks for Faster Growth and Bigger Gains originally appeared on Fool.com is written by Ken McGaha.

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